Over the past ten days, I’ve heard from three industry contacts.
Two have halted their plans to initiate their own Medicare Advantage Organizations (MAOs). One has halted its plans for expansion.
My sources within the first two both cited problems getting funding from their venture capital partners. The other has not yet replied.
These are anecdotes, not data. In context, they may not mean much. But when you follow an industry, small ripples that run against the current should always make your antennae twitch.
I share them for your own deep background.
Could it be these connected VC firms sense the first changes in the air? Are they becoming less interested in MAOs as a revenue play? Are they directing their gaze towards MAOs looking to build a book of business for acquisition?
Only time will tell.
There is a greater than 50-50 chance that in it’s “Final Rule” release in April, CMS will discuss competitive bidding for MAOs.
If it does, no matter if you're are an MAO, a health system or a physician practice, you need to convene a strategic planning session and make a decision.
Are you going to maintain your focus on revenue generation?
If so, develop and protect your niche and focus on controlling care costs---because the "deep pockets" may be gunning for your market share.
Or are you going to pivot to a “buff and sell” plan?
If so, you better make the changes that will grab covered lives.
Improve service, decrease patient costs, align with insurers. Do what you have to do and be ready to sell when the offer comes.
What if you're not an MAO yourself, but merely work one?
In a consolidating market, you're going to be asked to deliver care for less money. Better get lean and improve your care system's feedback loop.
And any extra services, such as care management or assisting with prior auths---off-load them on your insurer partner. They'll be doing them anyway. And unless you're exceptional, they're probably not adding anything to your bottom line. (Check out this week's Sunday Update
And if you're a worker bee---improve your talent stack. With consolidation comes lay-offs. And you want to have a leg up if you're thrown out.
In any case, the sooner you determine your focus the greater your competitive advantage will be.
That’s a lot of extrapolation based on a couple of little data points. But one thing is for sure: Medicare Advantage as a program has changed more in the past 2 years than in the past 15.
If your organization's strategic focus isn’t changing along with it, then you can expect to be left behind.